Guidance on contractual issues arising from certain forms of flexible working
The NHS People Plan highlights the importance of providing opportunities for staff to work flexibly in order that they may achieve a better work-life balance. The Staff Council was engaged to negotiate the contractual changes and to support employers to improve flexible working policies and practices.
This guidance details some of the ways individuals can work flexibly that have contractual implications regarding NHS terms and conditions and may also interact with specific statutory protections for workers/employees. Statutory employment rights may vary according to whether individuals are workers or employees.
At the time of writing this guidance, the government opened a consultation on changing the calculations used to establish part-year and irregular hours workers holiday entitlement. In addition, the Flexible Working Bill (Employment Relations) is currently going through parliament. The guidance may be amended post-publication to reflect any future changes in legislation.
It should be used in conjunction with section 33 of the Terms and Conditions of Service Handbook and the full suite of resources available to support flexible working.
Please note: This guidance may be expanded at a later date to provide clarity on different elements including how different types of flexible working can affect sickness absence and pay calculations.
Interaction of the contractual provisions with statutory rights
The section 33 contractual changes go beyond the statutory provisions by making the right to request flexible working applicable from day-one of employment and by extending it to all requests, rather than just one in any 12-month period. Under the contractual provisions, the employee does not have to justify their request with specific reasons and employers should promote the right as part of the recruitment processes, as well as through ongoing employee support.
Employers should however be mindful that those employees with at least 26 weeks’ continuous service who have not made another request in the previous 12 months will still be covered by the statutory provisions – and therefore the right to bring a claim in the Employment Tribunal within three months of an alleged breach.
Policies should ensure employees are signposted regarding the statutory eligibility criteria and that the process for making requests is compatible with statutory requirements i.e. requests made in writing and with space to give their ideas on how any effects from the requested change can be accommodated.
In line with the NHS Staff Council negotiating advice, timescales for all requests should be consistent with the statutory provisions – that is completion including appeal should take place within 12 weeks unless there has been an express agreement with the employee to extend the timescale.
Where the escalation stage is envisaged, seeking an extension may be helpful to allow enough time for the process to be completed in a meaningful way, but the employee must agree to this and the extension must be for a specific time period, with the agreement recorded in writing.
Part-time working (PTW) refers to individuals who work less than full-time hours and can take many forms for instance: reduced hours or reduced days per week, including job shares and term-time only working.
A PTW has protection against less favourable treatment, as compared to full-time workers employed under the same type of contract on a pro-rata basis and should not receive less than the proportion of that pay or other benefit when comparing their hours to those of a full-time worker.
In looking at part-time working generally and its use within organisations, employers should note that it has been reported that there is a part-time penalty, generally in workforces, with PTWs being much slower to progress within organisations to senior positions than full-time colleagues. This is something for organisations to be mindful of when they consider progression within their organisation and whether opportunities are open for all employees.
As the majority of PTWs in the UK are women, a female PTW who is treated less favourably than a full-time worker by her employer may be able to bring a claim for indirect sex discrimination under the Equality Act 2010.
Holiday entitlement calculations
PTWs will receive the same holiday entitlements on a pro-rata basis as full-time colleagues and will get the pro-rata entitlement or the statutory minimum of 5.6 weeks per year as set out in the Working Time Regulations whichever is the greater.
Public holiday entitlements
The NHS Terms and Conditions set out that a part-time employee is entitled to paid public holidays no less than pro-rata to the number of public holidays for a full-time employee, rounded up to the nearest half day. See paragraph 15.6, Section 13, England. This entitlement should be added to their annual leave entitlement, and they should take public holidays that they would normally work as annual leave.
Employers may need to recalculate the annual leave entitlement for a part-time employee each year if there are additional or amended public holidays.
Part-time contracts, overtime and holiday pay
The handbook sets out that where part-time staff work additional hours, but their total hours do not exceed 37.5, this is treated as 'additional (standard) hours' and paid at plain time. Where regular additional hours are worked this must be factored into holiday pay calculations.
Where someone on a part-time contract regularly works additional hours, employers may want to consider offering staff an amendment to their contract to incorporate these.
Term-time only (TTO) working can take several forms for instance: working only during school term times; working during term times and half terms but not during Easter, Christmas, and summer school holidays; working for an agreed proportion of all the school holidays in addition to term time.
TTO contracts are a common form of flexible working and where these are requested employers will need to work through issues including:
- whether all paid annual leave entitlement is required to be taken in school holiday periods
- the precise number of working weeks the contract will cover
- if dates for working weeks will need to be adjusted from year to year in line with the school calendar
- designating which days are being taken as annual leave. This is important as it is relevant for leave entitlement/accrual during periods of sick leave, maternity/adoption leave etc. The easiest way to do this is by spreading leave proportionately across non-working days. Alternatively set days can be allocated in discussion with the employee
- any exceptional circumstances where the employee may be required to work during holiday periods (if applicable).
Holiday entitlement calculations
Calculation of holiday entitlement is an area requiring particular attention in the light of recent legal developments (see Appendix A).
Employees who have TTO contracts which cover periods when they are not working, should receive an appropriate proportion of the paid leave entitlement for an employee working all year round – this includes all annual leave and public holidays - and they are entitled to the statutory minimum of 5.6 weeks’ holiday per year as set out in the Working Time Regulations or the pro-rata contractual entitlement, whichever is the greater.
Calculations of holiday entitlement must meet equal pay considerations and must also comply with regulations covering PTWs and working time. TTO workers should receive no less favourable terms regarding holiday entitlement than full-time employees.
Appendix A outlines a method and a number of worked examples for calculating pay and annual leave. These are based on guidance from the National Joint Council for Local Government Services national agreement on pay and conditions (Green Book) - whilst there may be other calculation methods, the NHS Staff Council believes these examples reflect a fair and equitable approach when calculating pay.
Hours-based holiday entitlement calculations
In some cases, it will be appropriate to use an hours-based calculation when calculating annual leave entitlement for a TTO employee and the rate that should be paid. This will be more appropriate where an employee works an unequal number of hours in a week or an unequal number of hours on each working day (see appendix for a worked example).
Pay and overtime considerations
Pay for TTO employees is usually calculated annually pro-rata. It is based on the number of hours the employee is contracted to work each week, the weeks worked over the year, and usually including the proportional annual leave and bank holiday entitlement averaged over the whole year and paid in 12 equal monthly payments.
Where a term-time employee works more than the standard 37.5 hours in a working week, they are entitled to overtime payments in line with section 3 of the Terms and Conditions of Service Handbook and any local enhancements. Where regular additional hours are worked – either as overtime (above 37.5 hours) or as additional standard time (above contractual hours but less than 37.5) – this should be factored into holiday pay calculations. For those working variable rotas, hours worked above 37.5 hours may be calculated over a set period, for example a four week roster.
Job sharing is when two or more PTWs share the duties of a single job. The job sharers work at different times, although there may be periods of overlap to pass on work-related information. The terms and conditions for staff who are undertaking a job share will mirror those put in place for other PTWs (and should therefore incorporate the pro rata principle) however there are some additional points to consider.
Other details that should be covered in contracts of employment for job-share partners include:
- regular reviews of the job share arrangements
- how frequently job-share partners need to communicate and how they deal with the handover of work to ensure an effective partnership
- how appraisals will be managed and whether the partners will input into each other’s appraisal
- liaising with each other about annual leave to ensure that, where required, cover is provided throughout the year
- what happens in the event that one of them leaves the organisation
- what happens in organisational change scenarios.
Whilst job-share partners may input into each other’s appraisals, pay-step reviews will need to be conducted for each individual using the pay progression standards in Annex 23 para 19.
The usual pro-rata principles for part-time employees should be applied subject to the principle that all workers are entitled to a minimum of 5.6 weeks annual leave under the Working Time Regulations.
An annualised hours contract may be appropriate where an employer and employee agree that the employee will work a total number of hours over the course of the year but their actual hours from week to week will vary. Many industries make use of annualised hours contracts where there is fluctuating demand for staff throughout the year, but annualised hours may also be requested by those with childcare responsibilities or other reasons to enable more hours to be worked during term time and fewer during the school holidays.
With contracts where hours are averaged over a set period – for example annualised, bi-annualised or quarterly – some hours may be fixed in a set schedule while some hours might be held ‘in reserve’.
Where the rostered/reserve model is used, employers will need to carefully ensure that contracted hours are not exceeded but also that the employee has the opportunity to work their reserve hours.
Hours worked should be regularly discussed and monitored in one-to-one meetings over the course of the averaging period to ensure the employee is on track to fulfil the required number of hours by the end of the period. Where it is identified that the employee risks being in deficit at the end of the period they should be given the opportunity to make up their hours. Where this is not possible options should be discussed. These could include carrying over a deficit into the next averaging period with an agreement on when these additional hours will be worked, or taking the deficit hours as unpaid leave
If by the end of the averaging period used – for example at the end of the year, half-year or quarter – contracted hours have been exceeded, these should be paid for as overtime where hours, when averaged, have exceeded 37.5 hours a week – or as additional standard time in line with section 3 of the Terms and Conditions of Service (TCS) Handbook.
Where unsocial hours are worked as part of an annualised pattern, payments can be applied prospectively in respect of rostered periods but may need to be applied retrospectively for reserve hours, as per:
- section 2: Maintaining round the clock services (England), and
- annex 5: Provisions for unsocial hours payments for ambulance staff’ in the TCS handbook.
Formula for calculating holiday entitlement, and pay schedule
The contract usually sets out the number of hours the employee is required to work as a figure for the full year (this could be based on full-time hours or part-time hours). Annual leave is then also usually expressed in hours and is deducted from the first figure to leave a final number of hours to be worked throughout the year. Holiday can be scheduled at the start of the leave year or more flexibility may be incorporated into the arrangements.
The salary for annualised hours workers is usually paid in equal instalments throughout the year regardless of the hours worked in a particular month.
The sections above have outlined more common types of flexible working however there may be other non-standard patterns that may be put forward for consideration and it is important that new ideas are given fair and reasonable consideration.
Employers may receive requests from staff to change their working hours or days to a pattern which includes working in the evening or a weekend day – for example a request to work 1pm-9pm or Tuesday to Saturday with Mondays off.
Unsocial hours premiums are defined in section 2.1 of the TCS handbook as payable “where staff are required to work to cover services in the evening, at night, over weekends and on general public holidays.”
If the flexible working request leads to an employee working during hours that attract unsocial hours premiums – and the work is of a type that the organisation requires to be done during those hours – the employee will be entitled to receive unsocial hours premiums in their pay. This could for example arise where the employee moves to a different role/setting following the escalation stage set out in section 33 of the TCS handbook.
However, if there is no requirement for the employee’s work to be done during a period attracting unsocial hours period – and it is simply the employee’s choice to work during those hours – the employer should ensure that this is explored as part of the conversation around their request and captured in written confirmation so that they are clear why unsocial hours premium pay is not applicable. HR and trade union advice should be sought if there is ambiguity.
Holiday entitlement/pay considerations
Dependent on the nature of the request, the usual pro-rata principles for part-time employees should be applied subject to the principle that all workers are entitled to a minimum of 5.6 weeks annual leave under the Working Time Regulations.
TTO pay and holiday entitlement calculations
The formula below seeks to ensure that the payment system for TTO employees is fair and secure on equal-pay grounds in comparison with all-year-round employees in the same organisation. The ratio of annual leave entitlement accrued per working day therefore needs to be the same for both groups provided that a TTO employee never receives less than 5.6 weeks.
Summary of calculations
Establish the year-round equivalent for comparison
Year-round contract total days: 365 days ÷ 7 x 5 = 260.71 total paid days.
260.71 days minus year-round contractual annual leave (incl. public holidays) = total working days.
Annual Leave ÷ total working days = annual leave accrual rate per working day.
Term-time only calculation:
Working days per year x annual leave accrual rate per working day = number of days’ annual leave entitlement.
Working days + annual leave days = total paid days.
TTO total paid days ÷ total paid days for year-round employees x 100 = pro rata pay % of full time equivalent provided this is not less than 5.6 weeks
The example below is based on employee working a full-time pattern (37.5-hour) with 5-10 years’ service.
The number of days available annually is 260.71 (365 ÷ 7 x 5). The annual leave comprises:
Basic annual leave 29 days
Public holidays 8 days
Total leave 37 days
Year-round employees with this leave entitlement work 223.71 days a year (260.71 minus 37) in order to produce a paid leave entitlement of 37 days.
Each working day therefore accrues 0.1654 days of paid annual leave (37 divided by 223.71).
The TTO employee works 39 weeks, which is 195 working days.
Paid leave accrues 0.1654 days of leave for every day worked so the paid leave entitlement should be 195 x 0.1654 = 32.253 days.
The number of paid days (working days plus paid leave) per year should therefore be 195 + 32.253 = 227.253 total paid days per year, compared with 260.71 paid days for a year-round employee.
This can be expressed as a percentage of the all-year-round contract: 227.253 divided by 260.71 = 87.167% of the FTE.
The TTO employee should therefore receive 87.167% of the full-time equivalent pay.
(227.253 days is equivalent to 45.45 weeks (i.e. 227.253 / 5 = 45.45 weeks) consisting of 39 working weeks and 6.45 weeks’ holiday).
Summary look-up table – 39-week contract
The table below shows a summary of the calculations for a 39-week TTO employee for the three levels of leave entitlement in the NHS Terms and Conditions.
Daily holiday entitlement accrual rate
Term-time contract (39 weeks)
(A) Working days
(B) Holiday entitlement (incl PH)
Total paid days
(E) Work-ing days
(G) Total paid days
Pro-rata pay %
(G) ÷ (C)
0-5 years’ service
(27 + 8 PH)
(B) ÷ (A) = 0.1551
(D) x (E) = 30.2445 days
(E) + (F) = 225.245
5-10 years’ service
(29 + 8 PH)
(B) ÷ (A) = 0.1654
(D) x (E) =
Over 10 years’ service
(33 +8 PH)
(B) ÷ (A) = 0.1866
(D) x (E) =
The Brazel case and minimum leave calculation under the Working Time Regulations
The Supreme Court’s July 2022 decision in the ‘Brazel’ case (which upheld the Court of Appeal’s 2019 decision) means that where the calculation of a TTO employee’s annual leave entitlement results in an entitlement of less than 5.6 of their weeks, the Working Time Regulations require the annual leave entitlement to be increased to 5.6 weeks.
For example, a TTO employee working 35 weeks of the year (175 days) a year and with less than five years’ service would have the following calculation:
0.1551 x 175 = 27.14 days’ holiday.
If they worked five days a week 27.14 days = 5.4 weeks. They would need an additional 0.86 days’ leave to make their holiday entitlement up to 5.6 weeks i.e. 28 days.
This is the current interpretation of the regulations. Should there be any change, an update will be issued.
Term-time and part-time contracts
Where the term-time employee also works a part-time pattern i.e. fewer than 37.5 hours a working week, a two-element pro-rata calculation will apply in the pay calculation. NB if the employee works non-standard hours or the working hours vary per day please use the hours based calculation outlined below).
An additional check will be needed for the public holiday entitlement as the Handbook says the pro-rata calculation is rounded up to the nearest half day for part-time staff*
Worked example – 39 weeks per year, 15 hours week, 5-10 years’ service
Accrual per day = 0.1654 days (see look-up table above) (*but check public holiday rounding)
Total paid days = 227.253
(195 working days + 32.253 days’ holiday – see look-up table above)
37.5 ÷ 5 = 7.5 hours per day for full-time hours work pattern.
227.253 paid days x 7.5 hours = 1,704.4 paid hours per year for a 39-week TTO employee working full-time hours work pattern.
1,704.4 / 37.5 hours x 15 hours = 681.76 paid hours per year for a TTO employee working 15 hours a week.
For a year-round full-time employee total paid time = 260.71 days x 7.5 hours = 1,955.325 hours.
Combined pro-rata calculation = 681.76 ÷ 1955.325 = 34.87%
The employee should receive 34.87% of the salary of a full-time year-round employee.
If a term-time employee was contracted to work 7 hours on a Tuesday and 3 hours on a Thursday (10 hours a week) for 39 weeks a year, it would be more appropriate to calculate their pay and leave entitlement based on hours rather than days.
Again, hours should be compared to those worked by an all-year-round equivalent (FTE) employee to calculate the proportion of leave and pay they are entitled to.
For a year-round full-time employee with 5-10 years’ service total working days are 223.71 (see table above).
Total working hours per year are 223.71 x 7.5 = 1,677.825 hours.
Total hours of leave are 37 days x 7.5 = 277.5 hours.
For the TTO (39 weeks) employee with 5-10 years’ service total working hours per year are 390 (10 hours a week x 39 weeks).
This equates to 23.24% of the hours of an all-year-round equivalent employee (390 ÷ 1677.825).
Therefore, the term-time employee should be entitled to 23.24% of the basic pay and leave entitlement of the all-year-round equivalent employee i.e. 64.49 hours of leave (23.24% of 277.5).
The Brazel case shows that a percentage and pro rata approach to annual leave for part year workers, such as TTO workers, may result in an individual receiving less than their entitlement under the Working Time Regulations. However, we consider that organisations are likely to find the approach set out above to be the most pragmatic way of dealing with annual leave entitlement for TTO workers. Provided employers ensure that a worker always receives the statutory entitlement of 5.6 weeks’ annual leave, taking the approach set out above is likely to be the preferred course of action by both workers and employers.
It should be noted that where workers undertake irregular hours, so that their pay changes from week to week, it will be necessary for employers to calculate pay for annual leave each time that leave is taken.